21/03/2018 05:37 AST
Following is the KFH Group Annual Report for 2017 presented by the Chairman, Hamad Abdul Mohsen Al-Marzouq
Praise be to Allah Almighty, and Peace and Blessings be upon our Prophet Muhammad (PBUH), his Family and Companions.
Esteemed Shareholders,
On behalf of myself, my fellow colleagues, members of the Board of Directors of Kuwait Finance House (“KFH”), I would like to present to you KFH Group Annual Report for 2017. We have managed this year to achieve positive results despite various difficult challenges, continued weak economic growth in several countries and geopolitical tensions.
However, it can be said that 2017 was a unique year in KFH’s journey of success as it was crowned by celebrating its 40th Anniversary as the first and pioneer Islamic bank in Kuwait. KFH has completed four decades of significant achievements that contributed effectively to the national development and growth of Kuwait’s economy. Started as an ordinary small bank in late 1970s, KFH has succeeded in becoming one of the largest, most prominent, credible and secured Islamic banks in the world where it also attained high credit ratings amongst the local and international peers with distinguished geographical diversity worldwide in Bahrain, Saudi Arabia, Turkey, Malaysia and Germany.
With steadiness and absolute confidence, KFH has managed during the past 40 years to enhance the value of its depositors and shareholders’ equity, increase returns on their investments and maintain steady profitability despite crises and major challenges encountered at both local and international levels. Starting from a limited capital not exceeding two million Kuwaiti Dinars upon incorporation, its total shareholders equity grew to reach approximately two billion Kuwaiti Dinars as at the end of 2017.
This long march has reflected several competitive advantages rendering KFH as a model, being a leading development bank with a prestigious Islamic trademark. KFH provides a large variable package of banking and investment products to motivate saving, meet finance and investment needs, attract more capital and acquire depositors and shareholders trust in light of its high quality assets, growth in profits and prudent risk management policy. All such factors have ranked KFH as one of the pioneer leading Islamic banks both at local and international levels.
We have started 2017 with a much stronger base where we reaped the harvest of our efforts during the past three years. These results are attributed, by the grace of Allah, to the loyalty of our customers, the outstanding efforts of our employees, our strict compliance with Islamic Shari’a principles and rules, the efficiency of our control systems and our good resources and risks management, where cost optimization outcomes have become obvious. We have executed prudent exits from certain investments to determine the ideal volume of investments after consolidating “KFH Investment Portfolio” through KFH Capital, overcoming certain duplicated activities, focusing on core banking business and expanding the strategic supervision circle so as to enable KFH to seize income generating investment opportunities and become the most sustainable in terms of profitability and the most trusted Islamic bank worldwide.
In a strategic level, KFH managed to set its 3-year strategy ending in 2020. The strategy is focused on three main pillars including the development of current customers’ base, innovation based on the new digital financial technology (FINTECH) and achievement of operational excellence.
We have set our ambitious strategy trend for the following years to counter challenges in the organizational, economic and operational environment and respond to regulatory requirements. Our aim is to make customers the main focus, exceed their expectations, maintain a constant leadership, and achieve distinct performance and sustainable growth.
In regards to banking services and private banking, we have maintained our leading position among Kuwaiti banks, especially in the field of expanding the new innovative Shari’a compliant solutions circle, increasing the focus on services through digital media that enhance customers’ self-service, whereas we provided XTM machines in some of our branch locations.
Corporate banking continued its growth benefiting from the strong and well established links and coordination with the Group’s subsidiaries and associates, which had the greatest effect on providing distinct financial solutions both at local and global levels. At the local level, KFH has arranged several major transactions to finance infrastructure projects including financing a company entering into contract with the Ministry of Electricity and Water with total value amounting 120 million Kuwaiti Dinars. Further, it has also financed a transaction for purchasing three aircrafts with value amounting 124 million Kuwaiti Dinars in favor of ALAFCO Aviation Lease and Finance Company. On the global level, KFH played the role of the main organizer and subscription manager of a transaction in US dollar syndication finance amounting 180 million Kuwaiti Dinars in favor of a wholly owned company of Omani Investment Fund. Further, KFH continued its focus on Small and Medium Enterprises.
At another level, Group Treasury’s contribution to the financial results achieved by KFH this year was strong and outstanding. The main focus was placed on the development and improvement of treasury and Sukuk investment activities. This fact is confirmed through the rating given by International Islamic Liquidity Management Corporation (IILM) where KFH has taken the leading position amongst main traders in the premier Sukuk issuances, thus representing a share of 30% of its value amounting 10 billion US dollars whereas KFH’s trade volume reached more than 15 billion US dollars in coordination with KFH Capital, which has excelled in the issuance and management of Sukuk through several major transactions including that of the Omani Mazoon Electricity Company in value of 500 million US dollars for a term of 10 years, and 500 million US dollars for APICORP Sukuk for a term of 5 years. The Group has also arranged for the first time sovereign Sukuk for Hong Kong amounting one billion US dollars for a term of 10 years in addition to other Sukuk transactions worldwide.
To enhance our commitment to a more open and cooperative environment and to cope with the highest possible code of ethics, we have established a new organizational structure for KFH Group Shari’a Department in 2017. The new structure is marked by consistency and absorbing the prudent governance standards issued by the Central Bank of Kuwait. Also, it aims to develop certain work mechanisms in the Shari’a sector, simplify procedures, enhance the Shari’a control efficiency and promote the Sharia performance quality level through intense training programs
to acquire accredited international certificates in the field of Sharia audit and control.
These factors have helped achieve a noticeable and clear improvement in most of the main sources of income at the Group level. Efforts exerted during the last three years with an aim of enhancing the profitability of the Group, optimizing its costs and achieving integration among its parties have led to several achievements as evidenced in 2017 financial results whereas we managed, thanks to Allah, to achieve a net profit for the shareholders reached 184.2 million Kuwaiti Dinars at a growth rate of 11.5% compared to the preceding year. Further, the earnings per share reached 32.41 fils at a growth rate of 11.4% whereas the total assets amounted 17.4 billion Kuwaiti Dinars at a growth rate of 5.2%.
Arab Times
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